What Might a Labor Market Look Like?

Abstract

Purpose – I suggest that we conceptualize labor markets as observable social networks, in which workplaces are the nodes and people moving between workplaces are the edges. The movement of people delivers the actionable information as to what the supply, demand, and going wage for labor might be. Labor market networks are hypothesized to be quite thin thus leading to substantial wage setting autonomy within workplaces, consistent with contemporary observations in both economics and sociology as to the weakness of labor market signals.Method – This paper reviews theoretical and empirical work in economics, sociology, and network science and develops a network image of labor market structure and function. Hypotheses derived from economic, sociological, and network theories are proposed to explain workplace-level wage setting.Findings – Information flow, trust in information, information variance, collusion, and status beliefs are all proposed as important network properties of labor markets. The paper outlines an observational strategy to make labor markets scientifically observable.Originality – Economists and sociologists often refer to labor markets as mechanisms setting the price of labor but rarely observe them. This paper outlines a strategy for making the invisible hand of the market scientifically observable.

Citation

Tomaskovic-Devey, D. (2013), "What Might a Labor Market Look Like?", Mcdonald, S. (Ed.) Networks, Work and Inequality (Research in the Sociology of Work, Vol. 24), Emerald Group Publishing Limited, Leeds, pp. 45-80. https://doi.org/10.1108/S0277-2833(2013)0000024006